VEU scheme faces uncertainty ahead of Victorian election amid fraud concerns

The future of the Victorian Energy Upgrades (VEU) scheme remains uncertain ahead of the November state election. With the Liberal party yet to provide any indication on whether it would retain the program, its fate hangs in the balance. Last year, the Liberals voted against a proposal to extend the VEU scheme for 15 years, pushing its expiration date to 2045. This opposition has left stakeholders questioning the program's longevity under a potential change of government.

As the election approaches, the lack of a clear position from the opposition party adds to the ambiguity surrounding the scheme. The VEU program, which has been a key driver for energy efficiency upgrades in the state, now faces a critical juncture. Until the Liberals clarify their stance, businesses and homeowners relying on the scheme for incentives may face an uncertain period. The outcome of the election could significantly influence the continuation or modification of the VEU framework in Victoria.

Opposition stance

While the Liberal party has not formally committed to retaining the Victorian Energy Upgrades scheme, its platform includes specific energy-related pledges that signal a shift in policy focus. The party has vowed to cancel the Gas Substitution Roadmap ban on gas appliance replacements, a move that directly addresses the fuel mix used in residential and commercial buildings. The Liberals have pledged to increase rebates specifically for commercial and industrial solar installations. These proposals suggest an alternative approach to energy efficiency, prioritising targeted financial incentives for solar and lifting restrictions on gas equipment rather than maintaining the current broad-based VEU framework.

Criticism of the existing program is central to the opposition’s argument. David Davis, the shadow energy minister, described the VEU scheme as "plagued by ongoing rorts, ‘cowboy’ operators and predatory practices". This characterization frames the uncertainty surrounding the scheme not just as a budgetary issue, but as a matter of regulatory integrity. The combination of these pledges and criticisms paints a picture of a government-in-waiting that views the current energy efficiency scheme with significant skepticism.

Regulatory response

Gerard Brody, chair and commissioner of the Essential Services Commission (ESC), explained that the current regulatory posture is a direct result of the program’s expansion. He noted that the growth in the VEU scheme and the increased complexity of the upgrades it covers necessitated a more robust oversight framework. This shift acknowledges that as the scope of eligible energy efficiency measures broadens, the mechanisms for verifying compliance become inherently more intricate.

Brody also addressed the evolving nature of potential fraud within the system. He stated that there will always be bad actors looking for new ways to cheat the system, with some specifically using artificial intelligence to try and subvert existing safeguards. This highlights a dynamic race between those seeking to exploit loopholes and the regulators tasked with closing them.

In response to these challenges, Brody affirmed that the ESC possesses sophisticated technology and has had success using it to identify breaches. While the specific enforcement tools and methods employed by the commission remain undisclosed, the assertion of technological capability serves as a counterpoint to the concerns about AI-driven fraud. The focus remains on maintaining integrity through advanced detection methods rather than detailing the specific operational protocols used to police the scheme.

Enforcement statistics

• 18 businesses faced enforcement actions in 2025–26, up from 8 in 2024–25
• 10 businesses were removed from the VEU program in 2025–26
• 241 businesses remain accredited in the VEU program as of Tuesday
• The ESC refused $4 million in VEU claims this year
• The ESC caused the forfeiture of $6.2 million in certificates this year

The data from the Essential Services Commission (ESC) outlines a marked increase in regulatory intervention over the past financial year. Enforcement actions against businesses doubled, rising from eight in the previous period to eighteen in 2025–26. Alongside these actions, ten operators were formally expelled from the scheme, reducing the pool of eligible providers. Despite these removals, 241 businesses held accredited status as of Tuesday, indicating that the majority of the registered workforce continues to operate within the program’s boundaries.

Financial penalties and claim rejections represent a significant portion of the ESC’s oversight efforts. The commission refused $4 million in claims submitted this year, denying payment for upgrades that failed to meet compliance standards. The ESC facilitated the forfeiture of $6.2 million in certificates. These figures reflect the value of non-compliant or fraudulent activity that the regulator has identified and neutralised. The combination of increased enforcement actions, removals, and financial penalties illustrates the ESC’s active role in policing the scheme, even as the total number of accredited businesses remains substantial.

Program scope and fraud trends

The Victorian Energy Upgrades scheme has expanded far beyond its initial residential focus, becoming a broad framework for energy efficiency across the state. According to the Essential Services Commission, the program has supported 2.4 million households and 180,000 businesses to date. This scale is set to grow further when the rooftop solar rebate program integrates into the VEU structure next July. The scope of eligible measures has also widened, with subsidies now extending to ceiling insulation alongside other upgrades.

As the program’s reach and complexity increase, the nature of fraudulent activity has evolved. Operators have shifted tactics from traditional telemarketing and door-knocking scams to more sophisticated methods. Recent cases involve the use of artificially generated documents to fake installations of heat pumps and hot water systems. This transition from physical canvassing to digital forgery complicates verification processes for regulators. The integration of new rebate streams and the expansion of accredited measures mean that the ESC must monitor a larger and more diverse pool of claims, where the threat of AI-assisted fraud poses a distinct challenge to maintaining program integrity.

What to watch

With the Victorian election approaching, the outcome will determine whether the VEU scheme faces the structural reforms or cancellation implied by the opposition’s criticism. Voters must weigh the Essential Services Commission’s reported enforcement successes against the shadow energy minister’s allegations of systemic fraud. The coming months will reveal if the government-in-waiting prioritizes regulatory integrity over the program’s expanded scope.